Carbon Paper Suggests a New Kind of University

March 11, 2013

by Cecil Bohanon, Ph.D.

Who remembers carbon paper? For those of you under 35, carbon paper is a sheet of black paper with carbon embedded on one side. Place it between two sheets of white typing paper, correctly insert in a typewriter and the typed document automatically generates a carbon copy. In the days before Xerox machines, this was the most cost-effective way of generating duplicate copies. Carbon paper was messy and awkward, but useful and necessary. And thank heaven it is gone, except that it is not.

According to a recent article in the Economist magazine, carbon paper still has uses. Prisons in 44 U.S. states require inmates to type and carbon-copy all outgoing correspondences, potters use it to sketch designs on vases, and it is essential in the tattoo trade. Who knew?

In a centrally planned economy, à la the old Soviet Union, carbon paper would have been eliminated long ago. In a market economy, however, no central agency dictates what shall be made. Profit-seeking firms are free to enter or exit a market at will. Carbon paper sticks around because those few remaining users are willing to pay a price sufficient to make it worthwhile for producers to make the stuff. No one in the government need plan, fret, monitor or even know this market exists. Freedom works well.

The president of my university (Ball State) recently informed us that if a student changes her major from math to accounting, the university loses state funding. This is because the Indiana Commission for Higher Education (ICHE) has established a funding formula that favors so-called STEM degrees. STEM is “science, technology, engineering and mathematics.” Math is STEM; accounting is not.

Indiana spends a lot of taxpayer resources on higher education. It is appropriate that the legislature and higher-education commission hold the schools that receive state funds accountable for their actions. It is understandable that the state legislature and ICHE will try to shape the higher-education system to meet the “economic needs of the future.” This inevitably means the state higher-education policy will try to pick the winners and support the facets of higher education that legislators and bureaucrats perceive as most appropriate.

The reality, however, is that no single agency or collection of well-meaning public servants can ever know the “economic needs of the future” or identify the academic degrees most useful to that end. Moreover, only the most naïve observer would imagine that political considerations are absent from the policy process. The risk is that this system may eliminate the “carbon-paper” majors of the future. In 2028, it may be that Latin majors will be in high demand for reasons we cannot now foresee, yet that course of study may have been deliberately squeezed out of higher education to the detriment of the Indiana economy.

For better or worse, the allocation of resources to higher education follows a Soviet model. This is a simple fact and not an insult. And indeed, given the billion dollars or so that taxpayers contribute to higher education, what other option is there except legislative and executive oversight?

Let me suggest an alternative — client oversight.

The point of state support of higher education is to encourage and support student access to education. Instead of directly supporting state institutions, why not take existing state funds and support students? The model may look something like this: Each college-eligible high school graduate receives a state-funded account that can be used to pay for expenses at state-supported universities and colleges. When the student depletes his account, he pays 100 percent of the further costs of education. State universities receive no direct support but are also free to pursue their own academic policies. They become more like firms that may find it in their interest to produce carbon paper.

Cecil Bohanon, Ph.D., columnist and adjunct scholar for the Indiana Policy Review Foundation, is a professor of economics at Ball State University.

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